The reporting of environmental, social and governance (ESG) risks could encourage investments that address climate change targets, but a lack of standards raises reliability concerns.
Overview of change
The COVID-19 pandemic has changed the working conditions and business operation of most organisations in 2020. However, evidence suggests that the core priorities of businesses may shift even further in response to Brexit, future trends in consumerism and work preferences.
The pace of change for businesses in 2020 has been accelerated beyond what had previously been predicted. For example, changes to the retail industry that had been forecast to take decades (such as independent retailers selling directly to consumers or increased uptake of supermarket home deliveries) happened within months during the COVID-19 pandemic.1 Some of the key ways it has been suggested that business priorities will change post-COVID include:
- An increased focus on sustainable and local products. This may be driven by consumers expressing a desire for more sustainable businesses.2 However, businesses may also move towards more domestically produced products in response to global supply chain issues that emerged during COVID-19 or as a result of border disruptions.3,4
- A return of production and manufacturing from offshore back to the UK (‘reshoring’) in response to increased shipping and aviation costs.5 While it has been suggested that this may make supply chains more resilient, there is some evidence that supply chain diversification (increasing the number of suppliers within a country or the number of supplier countries) has been the more pronounced outcome.6
- A prioritisation of online retail presence.7 This may also require greater automation to cope with increased demand and could result in increased globalisation as goods can be shipped from anywhere.4,5
- A shift in the provision of services (such as marketing, legal and accountancy services) online, which some stakeholders consider a permanent move.
- An increase in independent retailers selling directly to consumers. This may speed up a decline in department stores or change the practices of online marketplaces.2
A reduction in high street presence and office space. This would also likely result in a greater need to support homeworking but would lead to a reduction in costs for companies that have lower office costs as a result.2,5,8
Challenges and opportunities
There are likely to be disparities globally in how well pre-existing digital infrastructure can cope with many businesses moving online at once. This could affect the economies of nations unable to manage this quick transition. In addition, global supply chains that experienced disruption during the COVID-19 pandemic may be reimagined. This may negatively affect businesses located in more geographically isolated regions. Some nations may use this as an opportunity to promote more sustainable local supply chains, though some businesses may choose to relocate to where supply chains are more fully developed. Immediate impacts form the shock of 2020, such as the substantial debts that many firms have built up,9 may be a significant barrier to productivity and investment following a greater return to normal.
- How long will the effects of the COVID-19 pandemic last for different businesses? Will they pivot back to usual ways of working once the outbreak is under control?
- How will the ongoing changes to business operations affect the economies of different nations?
- How will the impact of COVID-19 interact with the economic changes caused by Brexit?
- Which types of businesses are more susceptible to these impacts?
Key questions for Parliament
- How can UK businesses best be supported in remaining operational and/or competitive, and to ensure UK workers are employed in the long-term?
- How can financial measures, such as business rates and taxes on online sales, be used to change the dynamics of online versus high street stores?
- How should the UK Government consider business debt that has accumulated over 2020?
- How will the UK economy be affected by supply chain restructuring, or by changes in multi-national companies’ investment and divestment activities?
- Which industries and firms are strategically important or vulnerable, and are therefore in need of greater protections?
- How will COVID-19 impact workers, how will this vary across regions, skill levels and age, and how can assistance be provided to firms and workers to mitigate this?
Likelihood and impact
High impact and high likelihood over the next 5 years.
- Evans, P. (2020). The great coronavirus acceleration. The Times.
- Wylie, C. (2020). Six ways Covid-19 is changing business (for the better). The Drum Network.
- PwC (2020) Covid-19: Impacts to business.
- Accenture (2020). Outmaneuver uncertainty: Navigating the human and business impact of Covid-19.
- Gagan, O. (2020). Could reshoring help manufacturers survive COVID? Raconteur.
- Beattie, A. (2020). Coronavirus-induced ‘reshoring’ is not happening. The FT.
- Steel, C (2020). COVID-19 will change business as usual forever. PA Consulting.
- B2B Marketing (2020). 5 changes to your business during the post-Covid-19 era.
- Partington, R. (2021). Debt levels soar for business as UK economy struggles to recover from Covid. The Guardian.
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